Advice for small companies: Take stock, take risks

Share via e-mail

David Rosenbaum says business owners should put a priority on keeping costs down.

By Joyce M. RosenbergAssociated Press
August 29, 2013

NEW YORK — The economy is showing signs of life and that makes it a good time for small business owners to reevaluate how they are running their companies.

Now that crisis mode has passed, owners need to make sure they are ready to take advantage of growth opportunities on the horizon. Specialists say it is time for owners to think about taking some risks and to make sure that they are taking care of employees.

There is evidence that owners are more confident. Nearly half of small business owners say there will be growth opportunities in the coming year, according to a survey taken in June and July by the National Small Business Association. That was up from 38 percent six months ago. And the Wells Fargo/Gallup Small Business index of small business confidence, compiled from a July survey of owners, jumped 9 points to 25 from the start of the year.

Of course, the economy has soft spots, including manufacturing and new home sales, which fell sharply in July. And many owners are uneasy because they do not know what health insurance will cost under the Affordable Care Act.

But owners should not give into uncertainty, said Paul Sarvadi, an adviser to many small business owners.

‘‘I wouldn’t let the negative news and negative backdrop rob you of that innate risk-taking advantage and edge that you have,’’ says Sarvadi, chief executive of Insperity, a Houston human resources provider.

Owners should take a break from the day-to-day grind and think about the future.

‘‘Back away from the business and look strategically at next year and ask, ‘what can I do differently?’’’ Sarvadi says. ‘‘Look at your [business] plan. Are you going to beat it or be behind it?’’

Owners should think about how they get their sales.

‘‘You have to aggressively make sure you have your best foot forward on every sale, especially those most likely to come in,’’ he says.

Keeping costs down should remain a priority because customers are willing to bolt to another business that offers lower prices, says David Rosenbaum, president of Real-Time Computer Services, a technology services company based in New York.

‘‘You need to be putting an additional emphasis on figuring out how to less expensively deliver what product or service you’re delivering,’’ Rosenbaum adds.

‘‘You may not be able to charge what you did before,’’ he added.

Owners also need to help customers understand that their products and services are more valuable than what competitors offer.

‘‘They have to figure out ways to communicate that they’re different,’’ Rosenbaum says.

Owners should take an honest, hard look at their companies and see if there are fundamental changes to make, recommends Kathleen Allen, a professor of entrepreneurship at the University of Southern California’s Marshall School of Business.

This is the time to take risk.

Surveys over the past year have shown that owners are playing it safe because of the economy. Many owners see hiring even one employee or investing in an expensive piece of equipment as risky. But that strategy is not always the safest bet.

‘‘To do nothing is to take a risk, and more often than not, it’s as great a risk as taking calculated action,’’ says Dennis Ceru, an adjunct professor of entrepreneurship at Babson College in Wellesley, Mass.

Consumer spending and the economy can rebound quickly. Companies that cannot jump on an opportunity because they do not have the staff or equipment might lose out to competitors.

Not moving forward because of uncertainty about the health care law is a mistake, USC’s Allen says.

As the labor market improves, many people will look for new jobs.

Retaining staffers is key, says Maria Martinez, owner of Respira Medical, a company that provides respiratory and other medical equipment.

Martinez, who has 60 employees, uses incentives like flexible scheduling and tuition reimbursement to reward and keep staffers.

They can come in late or leave early when necessary. She gives each employee four days a year with pay to volunteer at charitable organizations.

‘‘It could be the simplest things that could make a difference,’’ says Martinez, whose company is based in Linthicum Heights, Md.